5 crowdfunding platforms supported by a large number of backers

11 January 2017

Nowadays there are dozens of crowdfunding platforms for different purposes, from business to education. This industry is predicted to grow to US$ 300 billion in less than 10 years. Some of the companies are non-profit and therefore have no fee, while the equity companies are interested in the profit for the both parties. The platforms we will look at today set different goals, but there is one thing that unites them, and it’s the amount of backers.

Prosper Marketplace

Prosper was founded in 2005 and it is known as the first peer to peer lending system in the USA. With the help of Prosper people will be able to receive a personal loan of up to $35,000 that can be spent on both business and personal needs. Prosper Marketplace is one of the widest crowdfunding platforms, when it comes to investors: over 2 million. That website is debt-based, therefore, just like with traditional banks, a person will have to wait for a week, approximately, and the credit score will be checked, as well.

All the data about the payments has been public since 2009. However, all the loans are limited to $35 000, which may not be enough for everyone, but works well for individuals and small businesses. The fee varies from 5 to 30 percent. In 2016 Prosper introduced Prosper Daily – a new app that offers identity theft protection services: a person will have the ability to restore his or her identity if it is compromised. It also helps people to keep track of their transactions, credit score and budget, and it is updated monthly. Any suspicious activity can be reported with the use of this app.

Kiva.org

Kiva is an equity-based platform that supports entrepreneurs or students without fees. The organization is non-profit and its goal is to help to help small businesses in developing countries thrive. 1,200 000 of lenders have helped 2 million of people to raise approximately US$ 800 million using Kiva. Entrepreneurs who want to get money on Kiva need to lend US$ 25 first for the purpose of their choosing, and having friends of family members using that platform can also increase their chances to succeed. As for disadvantages, Kiva users can only raise US$ 10 000, so they might need to look for several platforms to get money on at the same time.

In 2013 Google funded the Kiva Labs project by US$ 3 million award, since it is intended to make the process of microloans more flexible and to give long-term loans. Kiva also created a KivaZip.org app, where entrepreneurs can get their loans directly with the use of PayPal or other electronic payment systems. KivaZip is more interactive, since the investors can have a closer look at those who they give money to, and the entrepreneurs, in turn, can provide them with personal stories to tell where the money would go.

CrowdCube

CrowdCube was founded by Darren Westlake and Luke Lang at the beginning of 2011 in the UK, and it’s one of the dominating crowdfunding platforms. Specializing in small or developing businesses it functions on “all or nothing” model, therefore, if people don’t reach their minimum goal, they don’t have to give anything back. With over 165 000 of investors, they have reached the sum of £180 million in total.

CrowdCube has launched both equity and mini-bond campaigns with Sugru (mouldable glue) earning over £3.5 million with the support of 3000 backers as one of the most successful on the list. The platform supports British businesses and allows people to create detailed portfolios to give investors more information. The equity based crowdfunding has increased by over £200 million within the last few years, which allows us to think CrowdCube has prospects for further development.

SeedInvest

This equity based crowdfunding platform is supported by over 146 000 of investors and it has raised $50 million for more than 100 campaigns. SeedInvest was launched in 2013 in New York, and since 2015 they have limited the participation to accredited investors. Despite of the information being invisible for general users, registered investors can obtain all the information needed, which also works for founders and executives.

The larger part of the companies that have raised money on SeedInvest are technology startups. Equipped with a security system, Seedinvest gives the investors the opportunity to lend money directly through the platform. The investments can start at US$ 100, but usually the backers prefer to give US$ 3000 at the very least. Virtuix Omni can righteously be called one of the most successful products. This virtual reality stimulator has raised over US$ 6 million on SeedInvest.

Companisto

This German company was founded in 2013, and it is focused on European startups. One investment is limited to € 500,000. However, the amount of money any campaign can raise is boundless. In the summer of 2016 Companisto has formed a partnership with PricewaterhouseCoopers(PWc), since both companies are familiar with entrepreneurs’ needs. 65,000 investors from all over the world helped the individuals and businesses raise over € 36 million.

Being one of the largest equity based crowdfunding platforms, Companisto encourages investors to become shareholders of startups they are interested in, so that they can get profit. They can also choose a growth company, getting regular fixed payments of 8% and interest payments twice a year. In both situations, there are no minimum payments. But while startup investments offer a lifetime profit-participation, established companies loan period cannot last more than four years.

Crowdfunding has had a tendency to grow worldwide. Title III in the JOBS Act allowed unaccredited investors to participate in crowdfunding , opening a new page for equity in the US. And according to the recent data about the UK, the revenue of such crowdfunding will also rapidly grow.The more information investors can get, the more they are inclined to back up a project. As a result, online profiles will become more detailed and will raise interest, in turn.